Update of 10-Year US Treasury Index

By: David Petch | Wed, Mar 9, 2011
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The daily chart of the 10 Year US Treasury Index is shown below, with upper and lower Bollinger bands in close proximity to the current price. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. I illustrated the short-term Elliott Wave count, which clearly indicates a change of trend. This is a real trend definer, because gold does well with rising interest rates (not year over year inflation). Wave 1 lasted ~3 months and went up 1.2%. Wave 2 should last until early May correcting down to the 3.2-3.3 region. Wave 3 should be at least 1.618 fold higher in price, so 1.618 x 1.2 is equal to 1.94 (essentially 2). Tack this onto 3.2 and the TNX rates are at 5.2%. Wave 3 is likely to take 5-6 months to complete this...or late 2011/early 2012. Wave 4 should take an equivalent amount of time or till May to June. If wave 4 corrects back to 4.5%, then a 1.2% move up to have equivalency to wave 1 is 5.7% in late 2012. Wave 2 should retrace 50-61.8% of wave 1, which would see a decline back to around 3.9%. This decline will correspond to wave 2 lasting all of 2013 and into 2014 which will see declining assets prices across the board. Subsequently, waves 3, 4 and 5 to follow would put interest rates around 8-10%...at a minimum.

Figure 1

The weekly chart of the 10 Year US Treasury Index is shown below, with upper 21 and 34 MA Bollinger bands above the index, suggestive that a mid-term top was put in place. Lower 34 and 55 MA Bollinger bands aer well beneath the index, suggestive that the mid-term trend is still intact. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. Although a 3 month correction in wave 2 should be expected, by no means anticipate the that rising interest rates are not locked in. The mid-term trend should be up for the next 12-18 months overall.

Figure 2

The monthly chart of the TNX| is shown below, with lower Bollinger bands still well beneath the index. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and above the %D in 2 and 3. The upward trend of the TNX should be on the order of 5-7 years.

Figure 3

The Elliott Wave count of the 10 Year US Treasury Index is shown below, with wave 1 shown to have recently completed. Note that I may raise the Degree of wave 1 to (1) at a later point in time if required...the present Degree of labelling at present is sufficient to illustrate the trend. The recent low back in November saw the conclusion of a contracting triangle with reverse alternation to end the 30 year decline in interest rates. Now, things to preserve wealth will be in tangible items.

Figure 4

Since I am not talking about precious metals until later this week, I thought I would provide an update on some things...



David Petch

Author: David Petch

David Petch

Treasure Chests is a market timing service specializing in value based position trading in the precious metals and equity markets, with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven to be very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested discovering more about how the strategies described above can enhance your wealth; please visit our web site at http://www.treasurechests.info.

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